Tell me again, Why did I invest?

Comments Off by in CMW News
February 26, 2016
Tell me again, Why did I invest?

Investors frequently forget that their biggest financial goals (and most of the wealth it takes to fund them) will require returns offered by stocks. Much less of their wealth needs to be liquid (without losses or very close to the break-even point), and for a much shorter period of time.

This is why it’s critical to own stocks much more of the time than not and also why we have to stay invested through the shorter, scary periods. Yes, even the dreaded bear markets when our wealth is literally worth less than ‘not so long ago.’

During these ‘sell offs’ and bear markets, which occur just as regularly as the up markets – only for shorter times, we have to focus on our long term goals. And be encouraged by the likelihood that stocks will be on track again in the next year or so.

If you have to find data to support this perspective it would be best to tune out the market and all the noise about it for now.

Instead, seek more solid information from your trusted advisor and others not indebted to the Wall Street machinery. After all, its job is to keep money moving – mostly in the wrong direction for long term investors.

Remember, the exchanges make money whether you sell or buy. That’s why there’s wisdom in the admonition to “buy when others are selling” and to “sell when others are buying.”

  • In spite of the doom and gloom drone going on, fundamentals are still positive indicating that global growth continues and the trend remains up for the US, the UK and Europe according to the Conference Board’s Leading Economic Indexes.
  • While politics at home is anything but predictable, radical change in legislation with the capacity to affect global growth negatively over the next year or two remains unlikely.
  • All this bodes well for stocks to exceed most common expectations this year.

Remember the near certain loss of your purchasing power over the long term without owning stocks and keep your eyes on the strategy designed to overcome that very real risk. That strategy should include whatever near term cash needs your personal situation requires.

If it does, then relax, pop up some pop-corn and watch a good movie instead of the news this evening.